Revocable Living Trust

Revocable Living Trust

Most people have heard they should think about getting a “living trust,” but do you really need it? There is no simple answer to that question­­­. Generally, the more complex your estate the greater your need for a proper estate planning, and a revocable living trust can be an essential component of an estate plan.

What is a Revocable Living Trust? Living Trusts are one of the most misunderstood estate documents. It is an estate planning instrument used, somewhat like a will, to determine when, how, and to whom your estate will pass. Also, Living Trusts covers three phases of the Trustee’s life – while the Trustee is alive and well, if the Trustee becomes mentally or physically incapacitated, and after the Trustee dies.

Who participates in a Revocable Living Trust? A revocable living trust normally consists of three parts: The settlor, the trustee and the beneficiary.

The Settlor: Also known as the grantor or trustor, is the person that creates the trust and provides funds for it. More than one person can be a Settlor of a trust, such as when a husband and wife join together.

The Trustee: This is the person who holds title to the trust and manages it. The settlor often serves as the trustee during his or her lifetime or it can be the person who the settlor appoints upon death, such as a spouse or child.

The Beneficiary: This is the person or entity that will receive the income or principal from the trust.

How does a Revocable Living Trust differ from a Will?Unlike a will, a revocable living trust takes effect prior to death in the event that you are incapacitated or disabled. It allows you to spell out how you want your property managed while you are living, while a will comes into play only after your death. In addition, a revocable living trust operates outside the probate system and the terms are private. Furthermore, it can place conditions and controls on the transfer of your assets to your heirs which may be desirable if you have young children or heirs with special needs. Depending on the size and complexity of your estate, it also may grant a significant estate tax benefit to you and your heirs by preserving certain spousal tax credits and deductions not available under a standard will or probate.

Do I still need both a Will with a Revocable Living Trust?Yes, the trust only pertains to those items placed (or funded) into the trust. If there are assets not funded into the trust, then a Will is useful for instructing your loved ones what to do with those assets.

Which one is right for you? Consultation with a qualified attorney should always be part of your estate planning and trust. Contact Owens and Perkins for all of your estate planning needs. Our experienced attorneys are available to discuss your individual situation and create an appropriate estate plan and all applicable documents.

Categories: Estate Planning

Contact Us

By clicking here you acknowledge that submitting your information to Owens & Perkins, P.C. does NOT establish an attorney-client relationship. A conflict check must be run prior to you communicating with one of our attorneys.